February 26,2009
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News: Good CC Score can Save Thousands on a Mortgage.
Credit card usage has side benefits that most people don't realize. For example, if you want to secure a large loan to buy a house or automobile, establishing a good credit card score can save you thousands, if not tens of thousands of dollars in interest charges. On the note of home mortgages, there are great advantages to shopping around. Many people worry that the added ‘hard inquiries' this causes on their credit report will hurt their credit card score. The general rule on that is; you are encouraged to shop for the best loan. As such, an exception is made here to allow you the grace of several of these within a 14 to 30-day window. So, just don't spread them out over too much time (not so, for credit card inquiries, however).
Just to use a conservative example: Suppose you purchase a new car for $25,000. A person with a 720 credit card score could expect to pay about $772 per month on the loan. Now let's consider a consumer with a credit card score of only 619 buying that same car. This consumer would be paying $877 a month. That's over $100 per month difference and, on a five-year payment plan, that could equate to an additional $6,000 cost on that car purchase. Imagine the difference when buying a house?
The bottom line: You can save big money on other types of loans by having a better FICO Score. Although the national average has recently dropped substantially, to a FICO Score of only 692, the mean score (meaning half of us are above and the other half are below) is still FICO 723. . Your interest rate can easily jump 10 percentage going from the favored FICO Score of 723 or above down to the unfavorable credit card score of 599.